Proposed Legislation

[BobKamman]

If your clients ask about proposed legislation, you can tell them you don’t even look at it before it is signed into law. Or, you can tell them what you know, especially if it might affect their tax planning and you might not see them again until next year.

I don’t expect some of the bill introduced in the Senate yesterday to be passed, but there are some ideas there that have a better chance than others. Here are some provisions about individual income tax:

1) The due date for 2019 returns would be July 15. That would also be the payment date. The first quarterly payment would be due on October 15.

2) Some taxpayers would get a $1,200 rebate – $2,400 on a joint return. The amount would be phased out between $75K and $100K AGI ($150K/$200K joint). This would be based on 2018 returns, unless one was not available, in which 2019 would be used. First, the rebate would be limited to tax paid after credits, except for the child tax credit and certain other credits. But even if tax was zero, the credit would be $600, provided the taxpayer had income of at least $2,500. Social Security would be counted as income. (I don’t know how they would figure this, for people who didn’t have to file a return.) Also, $500 per dependent would be added.

3) Distributions of up to $100,000 could be taken from pension plans and IRAs without the 10% penalty for taxpayers under 59 ½. It would still be taxed, but (as I read it) over a three-year period. And, it could be paid back within three years, as if it were a rollover. My eyes glazed over when I tried to figure out the rest of the details on this one.

In other news, Bloomberg Tax reports that IRS will reduce staffing by about 50% at agency facilities involved in “mission-critical operations.” This includes call centers and submission processing centers in places like Kansas City, Mo.; Ogden, Utah; Austin, Texas; and Fresno, Calif.

However, Commissioner Rettig said this will not have a significant impact on the agency’s mission-critical functions, such as processing tax returns and refunds. I don’t think he meant that half the people who work there are not necessary.